Treasury Official Supports Efforts for NCUSIF Parity in Deposit Insurance Reform Hearing

WASHINGTON-The Washington, D.C.-area has become accustomed to snow this winter season, so when the white stuff fell the day of the deposit insurance reform hearing, hampering traffic for hours, government officials still were not deterred from providing their points of view on the subject. The Senate Banking Committee hearing on deposit insurance reform Feb. 26 demonstrated nearly unanimous consent among the financial services regulators' on the issue. Representatives from Treasury, Office of Thrift Supervision, Office of the Comptroller of the Currency, and the Federal Reserve Board all recommended that the bank and thrift insurance funds be merged, the reserve ratio be more flexible, the automatic premium be eliminated, and "free-riding" the system be eliminated. While the Federal Deposit Insurance Corporation supported these items also, FDIC additionally supported indexing deposit insurance coverage levels. FDIC's written testimony read, "whatever the level of deposit insurance coverage Congress deems appropriate, the coverage limit should be indexed to ensure that the value of deposit insurance does not wither away over time." During testimony, Treasury Undersecretary for Domestic Finance Peter Fisher recommended that in the near future, "It would be appropriate to evaluate whether there are changes to the National Credit Union Share Insurance Fund that would be suitable in light of the proposed reforms made to FDIC insurance so as to avoid unintended disparities between the two programs." He also raised the issue of the long-term funding of NCUA, given the federal to state charter conversions.